When is the best time to trade CFDs?

Question:

I was wondering if you could tell me the best times of the day to trade CFDs.  Are there certain times of the day that breakouts would be more likely etc?

Response:

Knowing what time of the trading day presents the most opportunities is particularly important for day traders. A day trade has a short duration and as the name suggests; it is opened and closed in the same trading day. For this reason, the time of the day to trade is important to CFD traders as small market movements can result in leveraged returns.

Trading Breakouts is popular with many day traders. A breakout trading opportunity occurs when the market moves outside of a range. A price range is determined by the technical analysis concepts of support and resistance.

A trader could open a long position when the market price crosses above a resistance level and enter a short position when price breaks below a support level.

When day trading; there are three distinct period of the trading day to watch, these times can be grouped in to the morning session, the lunch period and the afternoon session.

Traders will often incorporate an analysis of volume and the market period when looking for trading opportunities rather than the best time to trade.

The market is extremely volatile from the opening through to 10:30am. Often volume during this period is considerably higher than at other times throughout the day.

The high volume occurs as the market responds to all the market information since the previous day’s close. This may include a news event released which had a positive or negative impact

After the morning session we move into the lunch period where the market has a narrow trading range as volumes drop off. As all market information is now factored into the share price you can see an equilibrium price is now met.

At the end of the session prior to the market close, volumes tend to increase again as traders try to establish a new trend and day traders close out their positions. This increase in volumes creates opportunities for a breakout to occur.

To determine what time of the day may present the greatest opportunity, traders should first look at what causes movements in the share price. A share price is essentially determined by simple market forces. Demand (or buying) for a stock will push the price up and supply (or selling) of a stock will move the price down. The more pressure a share price experiences in terms of volumes traded, the greater the tendency for breakouts providing trading opportunities for day traders.